Expedia 2014 Annual Report Download - page 43

transient accommodations tax that the state claims are due for the year 2012 totaling $41.7 million. The
Department’s claim for these subsequent tax amounts has been stayed by the tax court pending appellate review.
On July 18, 2014, the Department of Taxation issued final general excise tax assessments totaling $52.5 million
for non-commissioned travel agency services relating to hotel reservations and car rental for tax year 2013. The
online travel companies protested the assessments and requested additional support from the state of Hawaii for
the numbers included in the assessments. On December 22, 2014, the court stayed these assessments pending
review and decision by the Hawaii Supreme Court on prior tax assessments.
City of Portland Litigation. On February 17, 2012, the online travel companies brought suit seeking a
declaration that taxes are not due to the City of Portland or Multnomah County, Oregon. Expedia, Inc. v. City of
Portland, Case No. 1202-02223 (Circuit Court of the State of Oregon for the County of Multnomah). On
March 30, 2012, the city and county filed a motion to dismiss on the basis that the online travel companies
should be required to exhaust their administrative remedies including the payment of any taxes allegedly owed
before proceeding in a lawsuit. On June 15, 2012, the court denied the city and county’s motion to dismiss and
the case will proceed in court without the prepayment of the city and county’s claims for taxes. After the court
granted their motion for leave to amend, the city and county filed their amended answer, affirmative defenses and
counterclaims on June 11, 2013. On February 28, 2014, the city and county moved to amend their answer to
assert counterclaims based on recently amended state legislation, which motion the court denied on April 3,
2014. The online travel companies filed a motion for partial summary judgment, which the court granted in part
and denied in part on July 29, 2014. The claims for hotel taxes under the Portland ordinance will proceed to trial,
however, the city’s common law claims will not as those claims have been dismissed. A trial date has not been
set. In December 2014, the city and county issued assessments for hotel occupancy taxes for the period
October 7, 2013 to December 31, 2014 based on the amended state legislation. As a pre-condition to challenging
the assessments, on January 9, 2015, the Expedia companies paid $2.3 million under protest in alleged taxes,
penalties and interest.
Denver, Colorado Litigation. On February 3, 2012, the City and County of Denver’s Hearing Officer issued
a final decision on tax assessments against the online travel companies. On March 7, 2012, the online travel
companies filed a timely notice of appeal and complaint in state court seeking relief under two separate
procedural bases of appeal. Expedia, Inc., et al. v. City and County of Denver, Colorado, et al., Case
No. 2012cv1446 (District Court for the City and County of Denver, Colorado). On March 12, 2013, the trial
court held that the online travel companies are liable for hotel occupancy taxes to the City and County of Denver,
but held that taxes may not be collected for periods prior to April 2007 due to the bar of the statute of limitations.
Both the City and County of Denver and the online travel companies appealed from the trial court’s decision. On
July 3, 2014, the Colorado Court of Appeals held that the online travel companies are not liable for hotel
occupancy taxes. On August 14, 2014, the City and County of Denver filed a petition for writ of certiorari
seeking discretionary review by the Colorado Supreme Court of the Court of Appeals’ decision. That petition,
which the online travel companies have opposed, remains pending.
State of Wyoming Litigation. On February 28, 2013, the Wyoming Board of Equalization ruled that the
online travel companies are liable for sales tax on their online services to the State of Wyoming. The online
travel companies appealed. The Wyoming District Court certified the appeal to the Wyoming Supreme Court and
on April 23, 2013, the Wyoming Supreme Court accepted review of the online travel companies’ appeal. The
Wyoming Supreme Court heard oral argument regarding the online travel companies’ appeal of the Wyoming
Board of Equalization ruling that online travel companies are liable for hotel occupancy taxes on November 21,
2013. On April 3, 2014, the Wyoming Supreme Court affirmed the Wyoming Board of Equalization’s ruling.
Other Tax Litigation
Hawaii Tax Court Litigation (General Excise Tax). On January 31, 2011, the online travel companies
received final notices of assessment for general excise taxes for the tax years 2000 to 2011 on their services
relating to non-commissioned hotel room reservations. The companies appealed these assessments to the Hawaii
tax court. On January 11, 2013, the Hawaii tax court ruled that the online travel companies are obligated to remit
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